CNBC is reporting that Citigroup may writedown as much as $24 billion and layoff as many as 24,000 employees was a result of the ongoing financial and real estate correction.
Now we see why BofA honcho Ken Lewis reached for the Countrywide deal. You can either shrink or try to grow in the face of the rapid changes in valuations. If you think you can find value in something, might as well try to buy while you still have value.
The Countrywide deal also effectively puts up a smokescreen that could let Lewis and BofA bluff their way along for a couple more quarters before everyone — shareholders, auditors, regulators — catch on. BofA can stuff all its own dreck in a big writedown — $24 billion is now the floor — and blame it all on Countrywide. And be heroes for it.
So long as no one looks too closely at what BofA has been up to in recent years. It has not quite been Citi, but neither has it been shy about throwing new ideas around. You know, like lending money to people who cannot pay it back.
